A Chinese biotech firm that soared more than 4,500 per cent in the three months since its Hong Kong debut, has stoked fears of a speculative bubble in China healthcare stocks.
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Shares of TransThera Sciences soared as much as 64 per cent to HK$679.50 in Hong Kong trading on Tuesday, after pricing at just HK$13.15 in late June – a more than 50-fold gain that has made it the top performer on the Hang Seng Healthcare Index this year.
TransThera noted the “unusual movements” in its share price in an announcement on Tuesday, while confirming “business operation remained normal”.
The blistering rally highlighted investor appetite for China’s biotech initiatives amid a red-hot Hong Kong equity market, but it also heightened concerns about lofty valuations in a sector still fraught with drug development risks.
In the company’s latest interim report, TransThera posted zero revenue for the period ending June 30.
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“4,000 per cent in three months is definitely crazy,” said Haris Khurshid, chief investment officer at Chicago-based Karobaar Capital. “But it says more about sentiment than fundamentals.”
